Unlocking the Rise in Gold Prices
What is Gold
Gold has properties of rarity, uniformity, divisibility, indestructibility, and durability (it does not rust like iron).
Such characteristics are rare in other substances, and therefore it possesses monetary value.
Therefore, in currencies backed by national credit, when confidence in that backing falters, the price of gold tends to rise relative to the currency.
However, even though it has monetary value, it also has industrial value and is a precious metal.
Determinants of Gold Price
1) Since gold is measured in dollars, if the dollar strengthens, the gold price falls (and vice versa).
2) Gold does not yield interest, so when the dollar interest rate rises, gold's relative attractiveness decreases (and vice versa).
3) It is also used in industrial goods, medical products, etc.
4) There is demand from jewelry, inheritance assets, foreign exchange reserves, and more.
5) If financial uncertainty rises, demand for gold, which has absolute value, increases.
Based on the above, an estimate formula for the price of gold can be constructed.
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